Jan Brinckmann Competence of Top Management Teams and Success of New Technology-Based Firms

Transcription

1 Jan Brinckmann Competence of Top Management Teams and Success of New Technology-Based Firms

2 GABLER EDITION WISSENSCHAFT Strategisches Kompetenz-Management Herausgegeben von Univ.-Prof. Dr. Klaus Bellmann, Universität Mainz Univ.-Prof. Dr. Christoph Burmann, Universität Bremen Univ.-Prof. Dr. Jörg Freiling (geschäftsführend), Universität Bremen Univ.-Prof. Dr. Hans Georg Gemünden, Technische Universität Berlin Univ.-Prof. Dr. Peter Hammann ( ), Universität Bochum Univ.-Prof. Dipl.-Ing. Dr. Hans H. Hinterhuber, Universität Innsbruck Univ.-Prof. Dr. Thomas Mellewigt, Freie Universität Berlin Univ.-Prof. Dr. Dietrich von der Oelsnitz, Technische Universität Braunschweig Univ.-Prof. Dr. Christoph Rasche Universität Potsdam Univ.-Prof. Dr. Dr. h.c. Günter Specht, Technische Universität Darmstadt Univ.-Prof. Dr. Erich Zahn, Universität Stuttgart Der Resource-based View und in enger Verbindung dazu das Management von (Kern-)Kompetenzen haben in den vergangenen Jahren die Unternehmensführung nachhaltig beeinflusst. Wissenschaft und Praxis beteiligen sich gleichermaßen an Fragen der ressourcenorientierten Unternehmensführung und des Knowledge Managements. Die Schriftenreihe greift diese Entwicklung auf und schafft ein Forum für wissenschaftliche Beiträge und Diskussionen.

3 Jan Brinckmann Competence of Top Management Teams and Success of New Technology-Based Firms A Theoretical and Empirical Analysis Concerning Competencies of Entrepreneurial Teams and the Development of Their Ventures With a foreword by Prof. Dr. Hans-Georg Gemünden Deutscher Universitäts-Verlag

4 Bibliographic information published by Die Deutsche Nationalbibliothek Die Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data is available in the Internet at < Dissertation Technische Universität Berlin, st Edition November 2007 All rights reserved Deutscher Universitäts-Verlag GWV Fachverlage GmbH, Wiesbaden 2007 Readers: Frauke Schindler / Sabine Schöller Deutscher Universitäts-Verlag is a company of Springer Science+Business Media. No part of this publication may be reproduced, stored in a retrieval system or transmitted, mechanical, photocopying or otherwise without prior permission of the copyright holder. Registered and/or industrial names, trade names, trade descriptions etc. cited in this publication are part of the law for trade-mark protection and may not be used free in any form or by any means even if this is not specifically marked. Cover design: Regine Zimmer, Dipl.-Designerin, Frankfurt/Main Printed on acid-free paper Printed in Germany ISBN

5 Foreword Foreword Research on the creation and development of new firms has gained substantial prominence over the past ten years - especially in the German-speaking countries, where many new entrepreneurship chairs have been created in universities. Despite the surge in interest, short-comings in the research domain remain. These shortcomings primarily concern the lack of solid empirical research that reflects the state of the art of management science. Based on psychological theories, explanations of the founding of a firm and its subsequent success have been made frequently in terms of character traits and attitudes. Yet these studies explain little about a new firm s success. Their usefulness was especially limited concerning team-based ventures, which represent the majority of technology-based ventures. Other more recent approaches focus on entrepreneurial activities and how they impact new venture development. In this stream of research, the competence perspective has special importance as competencies of founders determine which activities they undertake, and how they perform these activities. A key question has been raised often by entrepreneurs, researchers and educators with respect to competencies of the founders: What are the critical competencies needed to create and grow a new firm? Although this is a fundamental question of entrepreneurship research, this question has hardly been investigated empirically. The dissertation of Dr. Jan Brinckmann analyzes how competencies of founding teams of new technology based firms affect the development of the new firms. In order to identify the critical competencies needed to create and grow a firm, Dr. Brinckmann reviewed entrepreneurship and management literature in depth and conducted interviews with entrepreneurs. The resulting competence concept comprises three areas of competencies: general entrepreneurial, social, and functional competencies. The general entrepreneurial competencies consist of conceptual, innovative, and execution competencies. The social competencies are comprised of teamwork, leadership, and network competencies. The functional competencies analyzed in his work include technology-management, marketing management, and financial management competencies. V

6 Foreword Prior to determining the success relevance of these different competencies, Dr. Brinckmann offers a detailed overview of the current state of the art of prior empirical findings in competence-related entrepreneurship research. This provides an excellent overview of how different competencies affect the development of new firms. Based on his own empirical study, Dr. Brinckmann develops a self-evaluation tool founding teams can use to assess their competencies. 212 executives of German NTBFs assessed their team s competencies using this tool. This data was analyzed to depict the competence profile of new venture teams and to identify the competencies that significantly impact the development of new technology-based firms. In his study, development is a comprehensive concept that integrates activities in the technological, market, and financing domain and includes success-measures in the technology, market and financial domain as well as a venture growth successmeasure. Based on an analysis of two stages in the development of a new firm (the start-up stage and a more advanced development stage), his study highlights critical competencies needed to successfully lead a firm at the respective stage. The detailed analysis of direct and indirect effects of the competencies on the development of new technology-based firms shows that functional competencies of the founding team in the technology, marketing, and financial management domain are important predictors of venture success. The functional competencies significantly impact their respective functional success measures. With regards to growth, the importance of financial management competence of the team, as a direct predictor for growth, is highlighted. Additionally, competence in networking becomes more growth-relevant as the venture evolves. Technology management and marketing management competence have indirect growth implications as they augment technology and market success, which are positively related to venture growth. VI

7 Foreword Overall, Jan Brinckmann s work excels regarding the validity, specification, and practical relevance. It offers valuable insights for those interested in new ventures such as founders, investors, educators, researchers, students, and consultants. It is a sophisticated, innovative study which fulfills the classic demands of rigor and relevance. Hans Georg Gemünden VII

8 Preface Preface The arrival of networked economies made me travel the world and get exposed to fascinating people, cultures, and new businesses. My interest grew concerning one central driver behind it all: entrepreneurial people. Throughout my dissertation I was fortunate to dedicate myself to the question of what makes entrepreneurs successful - a question that has fuelled my enthusiasm up to the present day. Looking back at the road travelled so far, I am very grateful for the positive and, at times, challenging moments, for the people I got to meet and their ideas, and for the inspiration they provided. I want to thank my supervisor Prof. Dr. Hans Georg Gem nden, chair of the Institute of Technology and Innovation Management at the Technical University of Berlin for his support that profoundly shaped my research. Special gratitude also belongs to Prof. Dr. Sören Salomo, chair of the Institute of Technology and Innovation Management at the University of Graz, who strongly fostered my research by being a close advisor throughout the whole research process. During my visiting stays at Cornell University, Stanford University, and Case Western Reserve University, I was fortunate to experience new approaches to entrepreneurship in research and education. To all promoters and supporters of these stays, I want to express my special gratitude: Prof. Dr. Robert Hisrich now at Thunderbird University, Prof. Dr. James Baron now at Yale University, and Prof. Dr. David BenDaniel at Cornell University. Special gratitude and thanks go to Prof. Dr. Gezinus Hidding at Loyola University Chicago whose dedication to improving my dissertation writing is unsurpassed. Additionally, I want to thank Prof. Dr. Günther Faltin whose approach to entrepreneurship has impacted me deeply. Furthermore, I want express my gratitude to the German Business Foundation (Stiftung der Deutschen Wirtschaft) for its intellectual and financial support. The members of the foundation have been a great source of encouragement and support throughout my academic education. I also owe special gratitude to the founding teams that supported my research by giving valuable advice and participating in this study. IX

9 Preface Last, yet most-importantly, I want to thank my dear family and friends who have always given me motivation, unconditional support, and affected the way I am. May all your entrepreneurial efforts - private and professional - be prolific. Jan Brinckmann X

10 Table of contents Table of contents Index of abbreviations...xvii Index of figures...xix Index of tables... XXI 1. Introduction Importance of new ventures Purpose and delimitation of this study Research method and structure of this research Fundamental research terms New technology-based firms Management and entrepreneurship Competence Executive teams Theories regarding entrepreneurial and management competencies and the development of new technology-based firms Development of the competence concept for new technology based firms Competence concepts in entrepreneurship science Competence concepts in management literature Additional competence requirements demanded by entrepreneurship science Synthesis: entrepreneurial-management-competence Specification of the entrepreneurial management construct General entrepreneurial competencies Conceptual competencies Innovation competencies Enforcement competencies Social competencies Teamwork competencies Leadership competencies Network competencies Functional competencies XI

11 Table of contents Technology management competencies Marketing management competencies Financial management competencies Theoretical approaches to the development of new firms Galbraith stages of growth model Kazanjian stages of growth model Klocke model Development concept for production based NTBFs Theories linking competence and the development of firms Theory of the growth of the firm Resource based view of the firm Dynamic capability approach Human capital approach Summary of theoretical approaches Empirical evidence about competence and the development of new firms Empirical studies relating to general entrepreneurial competencies Empirical studies relating to conceptual competencies Empirical studies relating to innovative competencies Empirical studies relating to enforcement competencies Empirical studies relating to social competencies Empirical studies relating to teamwork competencies Empirical studies relating to leadership competencies Empirical studies relating to network competencies Empirical studies relating to functional competencies Empirical studies relating to technology management competencies Empirical studies relating to marketing management competencies Empirical studies relating to financial management competencies Empirical summary Conceptual framework: Entrepreneurial-management-competence and its effects on task complexity and the success of new firms XII 5.1 Design of the comparative static conceptual framework Venture success Direct effects of EMC on venture success

12 Table of contents Direct effects of general entrepreneurial competence on success Direct effects of conceptual competence on growth Direct effects of innovation competencies on growth Direct effects of enforcement competence on growth Direct effects of social competencies on growth Teamwork-competence and growth Leadership-competence and growth Network-competence and growth Direct effects of functional management competence on functional success and growth Direct effects of technology management competence on technology success and growth Direct effects of marketing management competence on market success and growth Direct effects of financial management competence on financial success Indirect effects of competence on growth Complexity of the first development task Functional competencies and task complexity Task complexity and growth Functional success and growth Venture development and the development of competencies Summary of hypotheses Research process, sample and method Process of empirical research Sample description Method of empirical study Method selection for analysis of structural equation models Description of the partial least square approach Evaluation of measurement and structural models Evaluation of the measurement model Evaluation-criteria for reflective constructs Evaluation-criteria for formative constructs Evaluation of the structural model Presentation of the measurement model Entrepreneurial-management-competence XIII

13 Table of contents General entrepreneurial competencies Conceptual competence Innovation competence Enforcement competence Social competencies Teamwork competence Leadership competence Network competence Functional competencies Technology management competencies Strategic technology management Technology analysis Internal technology development External technology acquisition Technology protection Utilization of technology Technology controlling Composition of the technological management construct Marketing management competencies Strategic marketing competence Market analysis competence Transactional marketing competence Relational marketing competence Composition of the marketing management construct Financial management competence Strategic financial competence Financing competence Liquidity management competence Accounting competence Composition of the financial management construct Complexity of the first development task Success-measures Technology success Market success Financial success Growth XIV

14 Table of contents 8. Empirical findings Descriptive analysis of the competencies and firm development Development of new technology-based firms Activities at start-up Current activities Development of entrepreneurial-management-competence Competence development based on functional background experiences of the different team members Development of entrepreneurial-management-competence based on team-characteristics Analysis of the effects of entrepreneurial-management-competence on the development of new technology-based firms Effects of entrepreneurial-management-competence on the development of new technology-based firms at start-up Effects of entrepreneurial-management-competence on the development of new technology-based firms at the exploitation stage Combined effects of entrepreneurial-management-competence on the development of new technology-based firms at the exploration and exploitation stage Discussion of central findings and implications Central research findings Implications Implication for researchers Implications for entrepreneurs Implication for policy makers and educators Limitations and further research Limitations Further research Appendix I. Distribution and correlation of constructs at the exploration stage II. Distribution and correlation of constructs at the expoitation stage III. Confirmatory factor analysis at the exploration stage IV. Confirmatory factor analysis at the exploitation stage Literature XV

15 Index of abbreviations Index of abbreviations Index of abbreviations AGFI ANOVA AMOS A.o. AVE Cor. Coe. EMC E.g. Et al. Etc. Fig. GEM GFI H High-Tech LISREL Max Min N Nr. NTBF PLS R&D SD SME SPSS Tab. TMT Adjusted goodness of fit index Analysis of Variance Analysis of Moment Structures Among others Average Variance Extracted Correlation Coefficient Entrepreneurial-management-competence For example Et altera Et cetera Figure Global Entrepreneurship Monitor Goodness of Fit Index Hypothesis High technology Linear Structural Relationships Maximum Minimum Sample Size Number New Technology-Based Firms Partial Least Square Research and Development Standard Deviation Small and Medium Sized Firms Superior Performing Software Systems Table Top Management Team XVII

16 Index of figures Index of figures Index of figures Fig. 1: Founding activity in Germany... 2 Fig. 2: Research structure... 8 Fig. 3: Functional demands of the entrepreneurial process Fig. 4: Entrepreneurial-management-competence Domains Fig. 5: Interaction partners and respective social competencies Fig. 6: Structure for the analysis of functional competencies Fig. 7: Subdomains of the functional competencies Fig. 8: Klocke model of development stages Fig. 9: Three dimensional development model of NTBFs Fig. 10: Theoretical links between competence and venture development Fig. 11: EMC, task complexity and venture success at the exploration stage Fig. 12: EMC, task complexity and venture success at the exploitation stage Fig. 13: EMC, task complexity and venture success at both stages Fig. 14: Technology background of the NTBFs sample Fig. 15: Venture background of the NTBFs sample Fig. 16: Formative and reflective measurement models Fig. 17: Path model using formative and reflective constructs Fig. 18: Estimation process of the PLS-algorithm Fig. 19: Operationalization process of formative constructs Fig. 20: Start-up activities in the technology and marketing domain Fig. 21: Start-up activity concerning the Klocke model and financing activities Fig. 22: Current activities in the technology and marketing domain Fig. 23: Current activities concerning the Klocke model and financing activities Fig. 24: Development of sales and stage advancement Fig. 25: Calculation of absolute development speed Fig. 26: Change of competence profile from start-up to present Fig. 27: Effects of EMC on venture development at the exploration stage Fig. 28: Effects of EMC on venture development at the exploitation stage Fig. 29: Effects of EMC on venture development at both stages XIX

17 Index of tables Index of tables Index of tables Tab. 1: Competence concepts of entrepreneurship research Tab. 2: Competence oriented concepts of management science Tab. 3: Galbraight organization development model Tab. 4: Comparison of NTBFs development models Tab. 5: General empirical studies relating to entrepreneurial management competence Tab. 6: Empirical studies relating to conceptual competencies Tab. 7: Empirical studies relating to innovative competencies Tab. 8: Empirical studies relating to enforcement competencies Tab. 9: Additional empirical studies relating to social competencies Tab. 10: Empirical studies relating to teamwork competencies Tab. 11: Empirical studies relating to leadership competencies Tab. 12: Empirical studies relating to network competencies Tab. 13: A general study relating to functional competencies Tab. 14: Empirical studies relating to technology management competencies Tab. 15: Empirical studies relating to marketing management competencies Tab. 16: Empirical studies relating to financial management competence Tab. 17: Success dimensions and research orientations Tab. 18: Summary of research hypotheses Tab. 19: Central characteristics of the NTBFs sample Tab. 20: Comparison of the PLS and LISREL approach Tab. 21: Evaluation criteria for reflective constructs Tab. 22: Evaluation criteria for formative constructs Tab. 23: Measurement indicators of conceptual competence Tab. 24: Measurement characteristics of conceptual competence Tab. 25: Measurement indicators of innovation competence Tab. 26: Measurement characteristics of innovation competence Tab. 27: Measurement indicators of enforcement competence Tab. 28: Measurement characteristics of enforcement competence Tab. 29: Measurement indicators of teamwork competence Tab. 30: Measurement characteristics of teamwork competence Tab. 31: Measurement indicators of leadership competence XXI

18 Index of tables Tab. 32: Measurement characteristics of leadership competence Tab. 33: Test of discriminant validity at the exploration stage Tab. 34: Test of discriminant validity at the exploitation stage Tab. 35: Measurement indicators of network competence Tab. 36: Measurement characteristics of network competence Tab. 37: Measurement indicators of strategic technology management competence Tab. 38: Measurement characteristics of strategic technology management competence Tab. 39: Measurement indicators of technological analysis competence Tab. 40: Measurement characteristics of technological analysis competence Tab. 41: Measurement indicators of internal technological development competence Tab. 42: Measurement characteristics of internal technological development competence Tab. 43: Measurement indicators of external technology acquisition competence. 193 Tab. 44: Measurement characteristics of external technological acquisition competence Tab. 45: Measurement indicators of technological protection competence Tab. 46: Measurement characteristics of technology protection competence Tab. 47: Measurement indicators of utilization of technology competence Tab. 48: Measurement characteristics of utilization of technology competence Tab. 49: Measurement indicators of technological controlling competence Tab. 50: Measurement characteristics of technological controlling competence Tab. 51: Composition of the technology management competence construct Tab. 52: Validation of the technology management competence assessment at the exploration stage (t=0) Tab. 53: Validation of the technology management competence assessment at the exploitation stage (t=1) Tab. 54: Measurement indicators of strategic marketing competence Tab. 55: Measurement characteristics of strategic marketing competence Tab. 56: Measurement indicators of market analysis competence Tab. 57: Measurement characteristics of market analysis competence Tab. 58: Measurement indicators of transactional marketing competence XXII

19 Index of tables Tab. 59: Measurement characteristics of transactional marketing competence Tab. 60: Measurement indicators of relational marketing competence Tab. 61: Measurement characteristics of relational marketing competence Tab. 62: Composition of the marketing management construct Tab. 63: Validation of the marketing management competence assessment at the exploration stage Tab. 64: Validation of the marketing management competence assessment at the exploitation stage Tab. 65: Measurement indicators of strategic financial competence Tab. 66: Measurement characteristics of strategic financial competence Tab. 67: Measurement indicators of financing competence Tab. 68: Measurement indicators of financing competence Tab. 69: Measurement indicators of liquidity management competence Tab. 70: Measurement characteristics of liquidity management competence Tab. 71: Measurement indicators of accounting competence Tab. 72: Measurement characteristics of accounting competence Tab. 73: Composition of the financial management construct Tab. 74: Validation of the financial management competence assessment at the exploration stage Tab. 75: Validation of the financial management competence assessment at the exploitation stage Tab. 76: Measurement indicators of the complexity of the first product development Tab. 77: Measurement indicators of technology success Tab. 78: Measurement characteristics of technology success Tab. 79: Measurement indicators of market success Tab. 80: Measurement characteristics of market success Tab. 81: Measurement indicators of financial success Tab. 82: Measurement characteristics of financial success Tab. 83: Measurement indicators of growth Tab. 84: Measurement characteristics of growth Tab. 85: Activities in the technology and market domain at start-up Tab. 86: Financing activities at start-up XXII I

20 Index of tables Tab. 87: Activities according to the Klocke model and the financing domain at start-up Tab. 88: NTBFs current activities in the technology and market domain Tab. 89: Change of development stage relative to the Klocke model Tab. 90: NTBFs current activities concerning the Klocke model and the financing domain Tab. 91: Development stage and absolute development speed Tab. 92: Composition of the TMT at start-up Tab. 93: Composition of the TMT at present Tab. 94: Percent of firms that change their team-members Tab. 95: Effects of EMC on venture development at the exploration stage Tab. 96: Effects of EMC on venture development at the exploitation stage XXIV